Summaries of health policy coverage from major news organizations

Bill Overhauls California’s Medicare Cost-of-Living Classifications

Last week, President Obama signed a bill (HR 4302) that included an overhaul of cost-of-living classifications in California that are used to calculate Medicare payments, U-T San Diego reports.

The provision was attached to a measure that delays for 12 months a scheduled 24% cut to Medicare physician reimbursement rates nationwide.

Background

Adjustments to tie Medicare payments to cost of living were implemented in California in 1989.

San Diego County has been considered a "rural" county since that time, even though it is now the eighth-most-populated city in the U.S. As a result, physicians in that region have received about 5% to 10% less in Medicare reimbursement payments than physicians in areas such as Los Angeles and San Francisco.

According to U-T San Diego, because private insurers often base their payments on Medicare reimbursement rates, rural designation costs San Diego County physicians $100 million per year overall, or an average of $14,300 per physician.

Implications of the Bill

Under the bill, new classifications will take effect in 2017 and will be phased in over a six-year period. Physicians in counties that will no longer be considered rural -- including San Diego -- will not receive their full payment increases until 2022 under the plan.

The bill also includes a "hold harmless" provision, which allows lower-cost regions to keep their lower reimbursement rates even if other counties lose their rural designation.

According to U-T San Diego, the funding increases for some California physicians -- estimated to be about $50 million annually -- will come from a Medicare trust fund.

Reaction

Tom Gehring, executive director of the San Diego County Medical Society, called the measure a "huge victory."

However, other providers say the six-year phase-in period is too long. Mo Bidair, a San Diego urologist, said the inadequate reimbursements have existed for decades, adding, "I'm glad it got fixed, but I really wish it would get implemented faster" (Sisson, U-T San Diego, 4/5).

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